USDCNY – Daily Chart
The price of USDCNY has bounced after the Chinese stimulus measures and pushed toward the 7.087 resistance level. That will be an important level going forward.
Chinese trade data is released at around 12 pm HKT on Monday and could move the exchange rate if China’s export and import data is favourable.
China will “significantly increase” its government debt issuance to offer subsidies to lower income citizens, boost the property market, and replenish state banks’ capital as it pushes to revive the company’s growth.
Without providing a lot of detail on the size of the planned fiscal stimulus, Finance Minister Lan Foan told a news conference on Saturday that there will be more “counter-cyclical measures” in 2024.
“There is still relatively big room for China to issue debt,” he said.
A wide range of economic data over recent months has been lower than forecast, increasing concerns among economists and investors that the government’s roughly 5% growth target this year was at risk and that a longer-term structural slowdown could be happening.
Fiscal stimulus measures are the focus for investors in China and there is intense speculation in the market about the Politburo’s next moves. There is also an urgency about mounting economic headwinds and the recent commitment to support the market will likely be met with a desire to look correct.
Chinese stocks reached a two-year high, spiking 25% within days since the September meeting, before retreating as nerves set in given the absence of more details on the government’s expected spending plans.
Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of a fresh fiscal stimulus. The level of stimulus could help the USD to recover against the CNY.